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Don't Be Tricked with a Flip
Don't Be Tricked With A Flip
You're on the hunt for your perfect home and this flip has you excited. What's not to like? The seller recently purchased it, remodeled it and it has everything you like and it's practically a new home now, or is it?
The shiny new flooring, glistening kitchen and bathroom counter tops, new appliances, and smell of fresh paint is enough to make you want to rent a U-haul and start to move. But wait, before you do that, let's consider some strategies to make sure that you're getting everything for which you've bargained.
Let's always keep in mind that an investor flip is purely a business adventure to make a profit. There's nothing wrong with that and you can get some good houses which are flips, but you always need to proceed with caution. Here are some tips that I always give to my clients who are buying a flip.
1. Learn more about the seller by talking to buyers who purchased others flips sold by the same investors. The quality of craftsmanship and attention to detail tends to follow them from home to home. Do they quickly "glaze over" a home to maximize their profits, but leave you short in value? By talking to other buyers, you can get an idea just how well their remodeled homes have held up over time.
2. If substantial work has been done, such as removing walls or revising the floor plan, you may want to ask for the permits which the seller pulled to do the work. If mold was a problem, then ask to see the documentation for the remediation. Be sure that the people hired to do the work were properly qualified and licensed.
3. Don't be sucked in by "the pretty". Remember, the primary motive of an investor flip is to make a profit. This margin increases when items like old plumbing or rotting sub-flooring is overlooked and hidden behind a facade of new sinks, faucets, and eye-grabbing flooring. It's not always the case but a smart buyer is an educated buyer. Ask, ask ask!
4. Inspect Inspect Inspect! A professional home inspection is typically a given and I recommend it even if the seller has had the property recently inspected. While an inspector will look at the many vital points of a home, I think it's always good to have a plumber check things out. For a small fee, you can have the main sewer line inspected via a video camera. This can head off potential problems caused by imposing roots from trees and it can save you $$$ down the road.
Don't forget about the electrical system either. Homes built in the 70's or earlier often have old wiring which hasn't been updated. A new breaker box may look impressive, but what's wired into it is of more importance. Consider having a licensed electrician take a good look at it, and help to eliminate the "what if's".
I've sold flips which were great homes for my buyers, but we went above and beyond to ensure that it made good sense for my clients. We've also had situations when the investor refused to repair anything whatsoever and wouldn't make any financial allowances for needed work. That might be a signal to walk away. There's always another house.
In one odd instance, the investor was also the agent (never a good scenario) and he actually physically assaulted our home inspector and threw all of us off of the property. This was all because the inspector deemed the electrical system to be dated, not within code, and dangerous. That's a story for my future book and also a case for an anger management counselor. Needless to say, I recommended my buyers find another home and that's exactly what they did.
Finally, in my quest to better serve my clients, I have partnered with a specialized legal services firm. When you hire me to represent you, you will receive free legal advice and services from the moment we open escrow and you are covered for as long as you own the property.
This is just one of the perks of participating in our "Buyers Rewards Program." If you're serious about buying a home, we will save you money, protect your best interests, and help you to make a solid and smart investment for your future.
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